Over $43 million legal settlement for Iowans scammed in buying clubs

Iowa Attorney General Tom Miller has announced the state is getting over $40 million in settlements with companies that used “deceptive practices” to enroll consumers in discount and membership buying clubs.

“People are cheated out of small amounts of money many, many times,” Miller says.

Miller argued most consumers had no idea they’d been signed up for the clubs after an unrelated transaction with a bank or retailer. Miller said the companies marketed the buying club memberships as free, 30-day trial offers.

“Forty-five days go by, you get the bill and there’s $8 on there,” Miller said. “You think: ‘Well, I don’t remember that, but it’s only $8.’ And again, they focus group it and see what the breaking point is of people not checking — large numbers of people, that is — might be $8 or $10, so you leave it on there and it’s on there for a few months, maybe a year.”

Miller’s prosecuting team estimated Americans lost about $2 billion a year in these kind of “buying club” schemes.

“And Iowa’s one percent of the population, so we estimated that Iowans lost $20 million a year, so we sued Vertrue, the largest of these companies,” Miller said.

After two trials in Polk County District Court, the State of Iowa won — and the court in 2011 ordered the company to pay $28 million. Vertrue appealed the case to the Iowa Supreme Court — which required posting a $32 million bond. Miller said Vertrue filed for bankruptcy before the Supreme Court issued its ruling this past summer.

“The Supreme Court then found for us on basically all the issues, increased the judgment to $40 million,” Miller said. “We won’t get the $40 (million), but we’ll get $32 million that’s on a bond through an insurance company and because we were successful on this case we were able to settle with the other (buying club) operators for another $11 million, so it’s about $43 million that we, over the next year, will be distributing to Iowans.”

Companies like Vertrue run multiple discount clubs that offer credit monitoring, discounts on travel and even roadside assistance for a monthly fee.